Mr. Stephen Gitlin reports

BIG ROCK BREWERY ANNOUNCES IMPROVED SECOND QUARTER 2023 RESULTS

Big Rock Brewery Inc. today released its financial results for the three months ended June 30, 2023.

Financial summary

For the three months ended June 30, 2023, compared with the three months ended June 30, 2022, the corporation reported:

• Sales volumes, exclusive of co-packing volumes, of 43,660 hectolitres (hl) up 3 per cent compared with 42,409 hl;
• Net revenue of $12.7-million, down from $15.8-million;
• Operating income of $40,000 compared with a loss of $100,000;
• Net loss of $300,000, down 42 per cent from $600,000;
• Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) of $1.0-million, up 67 per cent from $600,000.

For the six months ended June 30, 2023, compared with the six months ended June 30, 2022, the corporation reported:

• Sales volumes, exclusive of co-packing volumes, of 77,438 hectolitres (hl) up 3 per cent from 75,688 hl;
• Total net revenue of $23.2-million, down 6 per cent from $24.6-million;
• An operating loss of $100,000 compared with a loss of $2.0-million;
• A net loss of $600,000, reduced by 68 per cent from $2.0-million;
• Adjusted EBITDA of $1.5-million, representing an improvement from breakeven last year;
• A net working capital improvement of $6.6-million on a year-over-year basis.

On March 31, 2022, the corporation amended the terms of its existing credit agreement with its senior lender which encompass both an operating facility of $6-million and term debt of $10-million. At June 30, 2023, the corporation had $800,000 available on its operating facility.

"We are pleased with the company's strong performance during the second quarter," noted interim president and chief executive officer Stephen Giblin. "In addition to the year-to-date improvement of $1.5-million in adjusted EBITDA versus last year, we have invested in our sales force, in product innovations, and in enhancements to our operations and technology. These investments should contribute to the future success of Big Rock."

Outlook and srategy

Big Rock's long-term growth strategy is to maximize the utilization of its capacity and capital investments to drive growth in volume, improve productivity and lower operating costs. With greater operational efficiencies and utilization of capacity, the corporation aims to gain market share and "premiumize" its branded portfolio. Innovation and co-creation of new products with the corporation's strategic partners will increase market demand and further enable the corporation to gain market share. Big Rock has embarked on a strategy of, where possible, balancing production and sales between quarters which allows for a reduction of operating costs. This strategy supports Big Rock's vision to become Canada's largest independent brewer.

Big Rock is continuing to focus on product innovation and development in the premium category to better align with trends in consumer demand. During the quarter Big Rock managed to increase adjusted EBITDA by 58 per cent, despite a shortfall in co-packing volumes. Profitability increased on a quarter-over-quarter basis and versus the prior year. The corporation has proven its ability to either remain in line or gain market share and profitability in recent quarters, demonstrating the portfolio's resilience to the otherwise flat-to-downward beer industry trends.

The corporation's co-packing segment continues to represent a significant percentage of revenue and total volumes, made possible by recent capital investments. The corporation expects to continue to realize overhead and labour cost efficiencies. Big Rock's co-packing agreements achieved approximately 43-per-cent year-over-year growth in 2022, however through June 30, 2023, co-packing volumes have trailed 2022 by 26 per cent. Management is endeavoring to at least match 2022's Q3 and Q4 co-packing volumes through the remaining two quarters of 2023.

Additional information

The interim condensed consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2023, dated Aug. 15, 2023, can be viewed on Big Rock's website and on SEDAR under Big Rock Brewery.

About Big Rock Brewery Inc.

In 1985, Ed McNally founded Big Rock to contest the time's beer trends. Three bold, European-inspired offerings -- bitter, porter and traditional ale -- forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, Big Rock's extensive portfolio of signature beers, continuing seasonal offerings, ciders (Rock Creek Cider series), custom-crafted private-label products and other notable, licensed alcoholic beverages keeps it at the forefront of the craft beer revolution, and still proudly contesting the beer and alcoholic beverage trends of today. Big Rock has brewing operations in Calgary, Alta.; Vancouver, B.C.; and Toronto, Ont. Big Rock trades on the Toronto Stock Exchange under the symbol BR.

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